UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

	FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2008 or

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from               to

Commission File No. 0-13298

	MORGAN STANLEY CORNERSTONE FUND II L.P.

	(Exact name of registrant as specified in its charter)

          New York                                      13-3212871
(State or other jurisdiction of                 	  (I.R.S. Employer
incorporation or organization)                 	  Identification No.)

Demeter Management Corporation
522 Fifth Avenue, 13th Floor
New York, NY 						              10036
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code   (212) 296-1999







(Former name, former address and former fiscal year, if changed since
last report)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes    X        No


Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.  See the definitions of ?large accelerated filer?,
?accelerated filer? and ?smaller reporting company? in Rule 12b-2 of the
Exchange Act.

Large accelerated filer_______ 		Accelerated filer_______
Non-accelerated filer   X   		Smaller reporting company_______

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).  Yes ___  No  X



	<page> <table> MORGAN STANLEY CORNERSTONE FUND II L.P.

	INDEX TO QUARTERLY REPORT ON FORM 10-Q

	September 30, 2008

<caption>



PART I. FINANCIAL INFORMATION

				<c>
Item 1. Financial Statements

		Statements of Financial Condition as of September 30, 2008
		(Unaudited) and December 31, 2007 ......................... 2

		Statements of Operations for the Three and Nine Months
		Ended September 30, 2008 and 2007(Unaudited)................3

		Statements of Changes in Partners? Capital for the
		Nine Months Ended September 30, 2008 and 2007 (Unaudited)...4

		Statements of Cash Flows for the Nine Months Ended
		September 30, 2008 and 2007 (Unaudited).....................5

		Condensed Schedules of Investments as of September 30, 2008
		(Unaudited) and December 31, 2007...........................6

		Notes to Financial Statements (Unaudited) ...............7-14

Item 2.	Management?s Discussion and Analysis of
			Financial Condition and Results of Operations .......15-27

Item 3.	Quantitative and Qualitative Disclosures About
			Market Risk ........................................ 28-40

Item 4.	Controls and Procedures ................................40

Item 4T.	Controls and Procedures ................................40


PART II. OTHER INFORMATION

Item 1A.Risk Factors............................................41

Item 5.	Other Information....................................41-42

Item 6.	Exhibits.............................................42-43



</table>


<page> <table> PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

	MORGAN STANLEY CORNERSTONE FUND II L.P.
	STATEMENTS OF FINANCIAL CONDITION
<caption>
	September 30, 	December 31,
	        2008        	        2007
	$	$
	(Unaudited)
ASSETS

	<c>	<c>
Trading Equity:
	Unrestricted cash	6,464,865	6,584,973
	Restricted cash	       59,443	        444,742

	     Total cash	6,524,308    	     7,029,715

	Net unrealized gain on open contracts (MS&Co.)	     149,856	        98,394

	     Total Trading Equity	6,674,164	 7,128,109

Interest receivable (MS&Co.)	               6,830	         15,021
Due from MS&Co.	                            752	          3,416

	     Total Assets	    6,681,746	    7,146,546

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

Redemptions payable	644,439	          92,051
Accrued administrative expenses	28,631	         30,222
Accrued management fees	                 19,405	          20,756

   	    Total Liabilities	      692,475	        143,029

Partners? Capital

Limited Partners (1,481.945 and
   2,025.388 Units, respectively)	5,757,834	6,774,185
General Partner (59.567 and
   68.567 Units, respectively)	      231,437                    	         229,332

	     Total Partners? Capital	    5,989,271	      7,003,517

	     Total Liabilities and Partners? Capital	    6,681,746	      7,146,546

NET ASSET VALUE PER UNIT	      3,885.32                             3,344.64

<fn>


The accompanying notes are an integral part
of these financial statements.
</table>
<page> <table> 	MORGAN STANLEY CORNERSTONE FUND II L.P.
	STATEMENTS OF OPERATIONS
(Unaudited)

<caption>
                        For the Three Months	                            For the Nine Months
  	   Ended September 30,                          Ended September 30,

                                            2008   	          2007    	       2008   	       2007
                                              $	             $	           $ 	     $

	<c>	<c>		<c>	<c>
INVESTMENT INCOME
	Interest income (MS&Co.)	         23,552		       70,341	  	     77,352		  235,586

EXPENSES
	Brokerage commissions (MS&Co.)	84,672	113,582	267,429		365,356
	Management fees	60,540    	67,412	 184,339	    	214,352
	Administrative expenses	10,000 	   12,000	29,000 	 	       36,000
	Transaction fees and costs	        4,268	           4,665	      13,994		       23,810

		   Total Expenses 	    159,480	       197,659		    494,762	     639,518

NET INVESTMENT LOSS 	   (135,928)	      (127,318)	    (417,410)		    (403,932)

TRADING RESULTS
Trading profit (loss):
	Realized	704,022	(414,391)	1,402,341		142,020
	Net change in unrealized	    (133,464)	        128,656	        51,462	 	     (22,432)

	           Total Trading Results	      570,558	      (285,735)	   1,453,803		    119,588

NET INCOME (LOSS)	      434,630	     (413,053)	    1,036,393	 	    (284,344)


NET INCOME (LOSS) ALLOCATION

	Limited Partners	419,775	(399,735)	 1,001,006		(275,808)
	General Partner 	                14,855	    (13,318)	35,387 		(8,536)


NET INCOME (LOSS) PER UNIT

	Limited Partners                                              	  241.22	(173.95)		  	540.68	 (107.38)
	General Partner                                              	  241.22	(173.95)		  	540.68	  (107.38)



			                                                                      Units                     Units	Units   		Units
WEIGHTED AVERAGE NUMBER
	OF UNITS OUTSTANDING                               1,751.889  		2,279.158	  	1,908.821    	2,421.537

  		 <fn>

The accompanying notes are an integral part
of these financial statements. </table>
<page> <table> MORGAN STANLEY CORNERSTONE FUND II L.P.
STATEMENTS OF CHANGES IN PARTNERS? CAPITAL
For the Nine Months Ended September 30, 2008 and 2007
(Unaudited)

<caption>



			                                                         Units of
			                                                      Partnership	 Limited	     General
			                                                         Interest    	     Partners   	          Partner    	     Total
					$	      $	 $

			<c>	<c>	<c>	<c>
Partners? Capital,
   December 31, 2006	2,611.342	 8,722,240	295,488	9,017,728

Net Loss                                                                 ?		(275,808)	(8,536)	(284,344)

Redemptions                                                    (401.831)		   (1,309,788)	       (30,765)	   (1,340,553)

Partners? Capital,
   September 30, 2007                                    2,209.511		 7,136,644	  256,187	  7,392,831





Partners? Capital,
   December 31, 2007	2,093.955	 6,774,185	229,332	7,003,517

Net Income                                                                ?		1,001,006	35,387	1,036,393

Redemptions                                                    (552.443)		   (2,017,357)	       (33,282)	   (2,050,639)

Partners? Capital,
   September 30, 2008                                    1,541.512		 5,757,834	  231,437	  5,989,271





<fn>










The accompanying notes are an integral part
of these financial statements. </table>
<page> <table> 	MORGAN STANLEY CORNERSTONE FUND II L.P.
	STATEMENTS OF CASH FLOWS
(Unaudited)

<caption>



				  For the Nine Months Ended September 30,

				            2008      	      2007
				     $	$

CASH FLOWS FROM OPERATING ACTIVITIES

			<c>	<c>
Net income (loss) 	1,036,393	(284,344)
Noncash item included in net income (loss):
	Net change in unrealized	(51,462)	22,432

(Increase) decrease in operating assets:
	Restricted cash	385,299	230,016
	Interest receivable (MS&Co.)	8,191	9,422
	Due from MS&Co.	2,664	                                (4,708)

Decrease in operating liabilities:
	Accrued administrative expenses	(1,591)	(7,377)
	Accrued management fees	              (1,351)                               (4,734)

Net cash provided by (used for) operating activities	    1,378,143	     (39,293)


CASH FLOWS FROM FINANCING ACTIVITIES

Cash paid for redemptions of Units	   (1,498,251)	 (1,334,218)

Net cash used for financing activities	    (1,498,251)	 (1,334,218)

Net decrease in unrestricted cash	(120,108)	(1,373,511)

Unrestricted cash at beginning of period	     6,584,973	    8,331,036

Unrestricted cash at end of period	     6,464,865	     6,957,525



<fn>





The accompanying notes are an integral part
of these financial statements.
</table>
<page> <table> MORGAN STANLEY CORNERSTONE FUND II L.P.
CONDENSED SCHEDULES OF INVESTMENTS
September 30, 2008 (Unaudited) and December 31, 2007
<caption>




Futures and Forward Contracts
       Long
   Unrealized
  Gain/(Loss)

Percentage of
   Net Assets
    Short
Unrealized
Gain/(Loss)

  Percentage of
     Net Assets
        Net
   Unrealized
   Gain/(Loss)

$
%
$
   %
   $

September 30, 2008, Partnership Net Assets:  $5,989,271





<c>
<c>
<c>
<c>
<c>
Commodity
     ?
         ?
   5,580
          0.09
     5,580
Equity
     ?
         ?
    21,120
          0.35
  21,120
Foreign currency
      (29,907)
       (0.50)
  111,059
          1.86
   81,152
Interest rate
      (13,242)
       (0.22)
         ?
         ?
     (13,242)






     Grand Total:
      (43,149)
       (0.72)
  137,759
          2.30
     94,610

     Unrealized Currency Gain





        55,246

     Total Net Unrealized Gain



       149,856






December 31, 2007, Partnership Net Assets:  $7,003,517









Commodity
         5,659
        0.08
  (1,460)
         (0.02)
     4,199
Equity
       17,639
        0.25
           (3,360)
         (0.05)
  14,279
Foreign currency
      (23,706)
       (0.34)
   (45,218)
         (0.65)
 (68,924)
Interest rate
       24,883
        0.36
    30,805
          0.44
     55,688






     Grand Total:
       24,475
        0.35
   (19,233)
         (0.28)
      5,242

     Unrealized Currency Gain





     93,152

     Total Net Unrealized Gain



         98,394





<fn>







The accompanying notes are an integral part
of these financial statements.
 </table>


<page> MORGAN STANLEY CORNERSTONE FUND II L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 2008
(Unaudited)

The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the financial condition and results of operations
of Morgan Stanley Cornerstone Fund II L.P. (the "Partnership").
The financial statements and condensed notes herein should be read
in conjunction with the Partnership's December 31, 2007, Annual
Report on Form 10-K.

1.  Organization
Morgan Stanley Cornerstone Fund II L.P. is a New York limited
partnership organized in 1983 to engage in the speculative trading
of futures contracts, options on futures contracts, and forward
contracts on foreign currencies and other commodity interests
(collectively, "Futures Interests").  The Partnership is one of
the Morgan Stanley Cornerstone Funds, comprised of the
Partnership, Morgan Stanley Cornerstone Fund III L.P., and Morgan
Stanley Cornerstone Fund IV L.P.

The Partnership?s general partner is Demeter Management
Corporation ("Demeter"). The commodity brokers are Morgan Stanley
& Co. Incorporated ("MS&Co.") and Morgan Stanley & Co.
International plc ("MSIP").  MS&Co. also acts as the counterparty
on all trading of foreign currency forward contracts. MSIP serves
as the commodity broker for trades on the London Metal Exchange.
Demeter, MS&Co., and MSIP are wholly-owned subsidiaries of Morgan
Stanley.  The trading managers to the Partnership are Northfield
Trading L.P. and John W. Henry & Company, Inc. (individually, a
"Trading Manager", or collectively, the "Trading Managers").

2.  Related Party Transactions
The Partnership's cash is on deposit with MS&Co. and MSIP in
futures, forward, and options trading accounts to meet margin
requirements as needed.  Monthly, MS&Co. pays the Partnership
interest income on 80% of its average daily Net Assets at a rate
equal to the average yield on 13-week U.S. Treasury bills. The
Partnership pays brokerage commissions to MS&Co.

3.  Income Taxes
No provision for income taxes has been made in the accompanying
financial statements, as partners are individually responsible
for reporting income or loss based upon their respective share of
the Partnership?s revenues or expenses for income tax purposes.
The Partnership files U.S. federal and state tax returns.  The
2004 through 2007 tax years generally remain subject to
examination by U.S. federal and most state tax authorities.



4.  Financial Instruments
The Partnership trades Futures Interests.  Futures and forwards
represent contracts for delayed delivery of an instrument at a
specified date and price.  Risk arises from changes in the value
of these contracts and the potential inability of counterparties
to perform under the terms of the contracts.  There are numerous
factors which may significantly influence the market value of
these contracts, including interest rate volatility.

The market value of exchange-traded contracts is based on the
settlement price quoted by the exchange on the day with respect
to which market value is being determined.  If an exchange-traded
contract could not have been liquidated on such day due to the
operation of daily limits or other rules of the exchange, the
settlement price shall be the settlement price on the first
subsequent day on which the contract could be liquidated.  The
market value of off-exchange-traded contracts is based on the
fair market value quoted by the counterparty.

The Partnership?s contracts are accounted for on a trade-date
basis and marked to market on a daily basis.  The Partnership
accounts for its derivative investments in accordance with the
provisions of Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133").  SFAS No. 133 defines a derivative
as a financial instrument or other contract that has all three of
the following characteristics:

1)	One or more underlying notional amounts or payment
provisions;
2)	Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in
market factors;
3)	Terms require or permit net settlement.

Generally, derivatives include futures, forward, swap or options
contracts, and other financial instruments with similar
characteristics such as caps, floors, and collars.

The net unrealized gains (losses) on open contracts, reported as a
component of "Trading Equity" on the Statements of Financial
Condition, and their longest contract maturities were as follows:
<table> <caption>
                 Net Unrealized Gains/(Losses)
                        On Open Contracts                 Longest Maturities

                Exchange-  Off-Exchange-             Exchange-  Off-Exchange-
Date             Traded      Traded        Total      Traded       Traded
                   $            $            $

		<c>   <c>	<c>	<c>	<c>
Sep. 30, 2008	85,066	64,790	149,856	Dec. 2009	Oct. 2008
Dec. 31, 2007	160,568	(62,174)	 98,394	Dec. 2008	Mar. 2008
</table>
The Partnership has credit risk associated with counterparty non-
performance.  As of the date of the financial statements, the
credit risk associated with the instruments in which the
Partnership trades is limited to the amounts reflected in the
Partnership's Statements of Financial Condition.




The Partnership also has credit risk because MS&Co. and MSIP act
as the futures commission merchants or the counterparties, with
respect to most of the Partnership?s assets. Exchange-traded
futures, exchange-traded forward, and exchange-traded futures-
styled options contracts are marked to market on a daily basis,
with variations in value settled on a daily basis. MS&Co. and
MSIP, each acting as a commodity broker for the Partnership?s
exchange-traded futures, exchange-traded forward, and exchange-
traded futures-styled options contracts, are required, pursuant to
regulations of the Commodity Futures Trading Commission ("CFTC"),
to segregate from their own assets, and for the sole benefit of
their commodity customers, all funds held by them with respect to
exchange-traded futures, exchange-traded forward, and exchange-
traded futures-styled options contracts, including an amount equal
to the net unrealized gains (losses) on all open exchange-traded
futures, exchange-traded forward, and exchange-traded futures-
styled options contracts, which funds, in the aggregate, totaled
$6,609,374 and $7,190,283 at September 30, 2008, and December 31,
2007, respectively. With respect to the Partnership?s off-

<page> MORGAN STANLEY CORNERSTONE FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

exchange-traded forward currency contracts, there are no daily
settlements of variation in value, nor is there any requirement
that an amount equal to the net unrealized gains (losses) on such
contracts be segregated.  However, the Partnership is required to
meet margin requirements equal to the net unrealized loss on open
forward currency contracts in the Partnership accounts with the
counterparty, which is accomplished by daily maintenance of the
cash balance in a custody account held at MS&Co.  With respect to
those off-exchange-traded forward currency contracts, the
Partnership is at risk to the ability of MS&Co., the sole
counterparty on all such contracts, to perform. The Partnership
has a netting agreement with MS&Co. This agreement, which seeks to
reduce both the Partnership?s and MS&Co.?s exposure on off-
exchange-traded forward currency contracts, should materially
decrease the Partnership?s credit risk in the event of MS&Co.?s
bankruptcy or insolvency.

5.  New Accounting Developments
In September 2006, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No.
157 ("SFAS 157"), "Fair Value Measurements".  SFAS 157 requires
use of a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value into three
levels: Level 1 - quoted market prices in active markets for

<page> MORGAN STANLEY CORNERSTONE FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


identical assets and liabilities; Level 2 - inputs other than
quoted market prices that are observable for the asset or
liability, either directly or indirectly (including quoted prices
for similar investments, interest rates, credit risk); and Level
3 - unobservable inputs for the asset or liability (including the
Partnership?s own assumptions used in determining the fair value
of investments).

Demeter evaluated the impact of adopting SFAS 157 on the
Partnership?s financial statements.  The Partnership adopted SFAS
157 as of January 1, 2008.  Based on its analysis, the effect of
applying SFAS 157 to the investments included in the financial
statements does not have a material impact on the Partnership?s
financial statements.

The following table summarizes the valuation of the Partnership?s
investments by the above SFAS 157 fair value hierarchy as of
September 30, 2008: <table> <caption>



Assets
 Quoted Prices in
Active Markets for
  Identical Assets
        (Level 1)
Significant Other
   Observable
       Inputs
     (Level 2)
 Significant
  Unobservable
    Inputs
  (Level 3)




  Total


<c>
<c>
 <c>

<c>
Unrealized gain on open contracts
         $85,066
$64,790
 n/a

$149,856
</table>

In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities ("SFAS 161").  SFAS

<page> MORGAN STANLEY CORNERSTONE FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)


161 is intended to improve financial reporting about derivative
instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand how those
instruments and activities are accounted for; how and why they are
used; and their effects on a Partnership?s financial position,
financial performance, and cash flows.  SFAS 161 is effective for
financial statements issued for fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years.
The Partnership is currently evaluating the impact that the
adoption of SFAS No. 161 will have on its financial statement
disclosures.

6.  Restricted and Unrestricted Cash
As reflected on the Partnership?s Statements of Financial
Condition, restricted cash equals the cash portion of assets on
deposit to meet margin requirements plus the cash required to
offset unrealized losses on foreign currency forwards and options
and offset losses on offset London Metal Exchange positions.  All
of these amounts are maintained separately.  Cash that is not
classified as restricted cash is therefore classified as
unrestricted cash.






<page> Item 2. MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

Liquidity.  The Partnership deposits its assets with MS&Co. and
MSIP as commodity brokers in separate futures, forward, and
options trading accounts established for each Trading Manager.
Such assets are used as margin to engage in trading and may be
used as margin solely for the Partnership?s trading. The assets
are held in either non-interest bearing bank accounts or in
securities and instruments permitted by the CFTC for investment of
customer segregated or secured funds.  Since the Partnership?s
sole purpose is to trade in futures, forwards, and options, it is
expected that the Partnership will continue to own such liquid
assets for margin purposes.

The Partnership?s investment in futures, forwards, and options
may, from time to time, be illiquid.  Most U.S. futures exchanges
limit fluctuations in prices during a single day by regulations
referred to as "daily price fluctuations limits" or "daily limits".
Trades may not be executed at prices beyond the daily limit.  If
the price for a particular futures or options contract has
increased or decreased by an amount equal to the daily limit,
positions in that futures or options contract can neither be taken
nor liquidated unless traders are willing to effect trades at or
within the limit.  Futures prices have occasionally moved the
daily limit for several consecutive days with little or no
trading.  These market conditions could prevent the Partnership
<page> from promptly liquidating its futures or options contracts
and result in restrictions on redemptions.

There is no limitation on daily price moves in trading forward
contracts on foreign currencies.  The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets, subjecting it to
substantial losses.  Either of these market conditions could
result in restrictions on redemptions.  For the periods covered by
this report, illiquidity has not materially affected the
Partnership?s assets.

There are no known material trends, demands, commitments, events,
or uncertainties at the present time that are reasonably likely to
result in the Partnership?s liquidity increasing or decreasing in
any material way.

Capital Resources.  The Partnership does not have, nor does it
expect to have, any capital assets.  Redemptions of units of
limited partnership interest ("Unit(s)") in the future will affect
the amount of funds available for investments in futures,
forwards, and options in subsequent periods. It is not possible to
estimate the amount, and therefore the impact, of future outflows
of Units.

<page> There are no known material trends, favorable or
unfavorable, that would affect, nor any expected material changes
to, the Partnership?s capital resource arrangements at the present
time.

Off-Balance Sheet Arrangements and Contractual Obligations.  The
Partnership does not have any off-balance sheet arrangements, nor
does it have contractual obligations or commercial commitments to
make future payments that would affect its liquidity or capital
resources.

Results of Operations
General.  The Partnership?s results depend on the Trading Managers
and the ability of each Trading Manager?s trading program to take
advantage of price movements in the futures, forward, and options
markets.  The following presents a summary of the Partnership?s
operations for the three and nine month periods ended September
30, 2008 and 2007, and a general discussion of its trading
activities during each period.  It is important to note, however,
that the Trading Managers trade in various markets at different
times and that prior activity in a particular market does not mean
that such market will be actively traded by the Trading Managers
or will be profitable in the future. Consequently, the results of
operations of the Partnership are difficult to discuss other than
in the context of the Trading Managers? trading activities on
behalf of the Partnership during the period in question. Past
performance is no guarantee of future results.
<page> The Partnership?s results of operations set forth in the
financial statements on pages 2 through 14 of this report are
prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use of
certain accounting policies that affect the amounts reported in
these financial statements, including the following:  The
contracts the Partnership trades are accounted for on a trade-date
basis and marked to market on a daily basis.  The difference
between their cost and market value is recorded on the Statements
of Operations as "Net change in unrealized trading gain (loss)"
for open (unrealized) contracts, and recorded as "Realized trading
gain (loss)" when open positions are closed out.  The sum of these
amounts constitutes the Partnership?s trading results.  The market
value of a futures contract is the settlement price on the
exchange on which that futures contract is traded on a particular
day. The value of a foreign currency forward contract is based on
the spot rate as of the close of business.  Interest income, as
well as management fees, brokerage commissions, transaction fees
and costs, and administrative expenses of the Partnership are
recorded on an accrual basis.

Demeter believes that, based on the nature of the operations of
the Partnership, no assumptions relating to the application of
critical accounting policies other than those presently used
could reasonably affect reported amounts.

<page> For the Three and Nine Months Ended September 30, 2008
The Partnership recorded total trading results including interest
income totaling $594,110 and expenses totaling $159,480,
resulting in net income of $434,630 for the three months ended
September 30, 2008. The Partnership?s net asset value per Unit
increased from $3,644.10 at June 30, 2008, to $3,885.32 at
September 30, 2008.

The most significant trading gains of approximately 6.8% were
achieved in the currency sector, primarily during August and
September. Such gains were recorded from short positions in the
Australian dollar, Swiss franc, Taiwan dollar, New Zealand
dollar, euro, Brazilian real, and Korean won versus the U.S.
dollar as the value of the U.S. dollar moved higher after U.S.
consumer confidence increased in August. Furthermore, the value
of the U.S. dollar moved higher in September amid a worldwide
?flight-to-quality? due to fears of an intense credit crunch and
subsequent fears of a global recession. Additional gains of
approximately 2.2% were experienced within the global stock index
sector during July from short positions in European and Taiwan
equity index futures as prices moved lower on concerns that
widening credit-market losses, weakening consumer demand, and
surging commodity prices would erode corporate earnings.
Additional gains were achieved during September from short
positions in U.S., Asian, and European stock index futures as
prices moved sharply lower amid unprecedented U.S. financial
<page> market volatility and turmoil following news of the
collapse of a major U.S. investment bank and the government
rescue of a U.S. insurance giant. Furthermore, U.S. equity
markets plunged on Monday, September 29, 2008, after the U.S.
House of Representatives rejected the Economic Stabilization Act
of 2008, which would have allowed the U.S. Treasury to purchase
troubled mortgage-backed securities from U.S. financial
institutions.  A portion of the Partnership?s gains during the
quarter was offset by losses of approximately 0.9% recorded in
the global interest rate sector primarily during July and
September from short positions in European fixed-income futures
as prices moved higher following a sharp decline in the global
equity markets, weaker-than-expected U.K. and German economic
data, and comments from European Central Bank President Jean-
Claude Trichet saying that economic growth would be ?particularly
weak?, thereby fueling demand for the ?safe haven? of government
bonds. During September, additional losses were recorded from
long positions in Japanese fixed-income futures as prices
reversed lower during the middle of the month after news of a
major U.S. government intervention in the financial sector eased
concerns that the credit crisis would continue to deteriorate the
growth of the global economy. Smaller losses of approximately
0.2% were recorded in the energy markets primarily during July
and September from long futures positions in crude oil and its
related products as prices reversed lower on signs that global
<page> economic growth might be slowing, which might curb future
energy demand.

The Partnership recorded total trading results including interest
income totaling $1,531,155 and expenses totaling $494,762,
resulting in net income of $1,036,393 for the nine months ended
September 30, 2008. The Partnership?s net asset value per Unit
increased from $3,344.64 at December 31, 2007, to $3,885.32 at
September 30, 2008.

The most significant trading gains of approximately 12.2% were
experienced in the currency sector during February, March, May,
and June from long positions in the euro, Mexican peso, Swiss
franc, Brazilian real, and Czech koruna versus the U.S. dollar as
the value of the U.S. dollar moved lower against its major rivals
after consistently weak U.S. economic data reignited fears of an
economic slowdown in the U.S., as well as following several
interest rate cuts by the U.S. Federal Reserve. Additional gains
were experienced, primarily during August and September, from
short positions in the Australian dollar, Swiss franc, Taiwan
dollar, New Zealand dollar, euro, and Brazilian real versus the
U.S. dollar as the value of the U.S. dollar moved higher after
U.S. consumer confidence increased in August. Furthermore, the
value of the U.S. dollar moved higher in September amid a
worldwide "flight-to-quality" due to fears of an intense credit
crunch and subsequent fears of a global recession. Elsewhere in
the currency sector, smaller gains were recorded from short
<page> positions in the Korean won versus the U.S. dollar
throughout the first half of the year, as well as during
September, as the value of the Korean won fell amid concerns of a
rising Current-Account deficit out of Korea, as well as a slowing
economy. Within the global stock index sector, gains of
approximately 4.2% were achieved during January, March, June, and
July from short positions in European and Asian stock index
futures as prices moved lower on concerns that a persistent U.S.
housing slump, mounting losses linked to U.S. sub-prime mortgage
investments, and a weakening job market would restrain consumer
spending. During September, Asian and European stock index
futures prices moved sharply lower amid unprecedented U.S.
financial market volatility and turmoil. Further gains of
approximately 1.3% were also recorded within the global interest
rate sector during May from short positions in short-term
European and U.S. fixed-income futures as prices fell after a
government report showed the U.S. economy had grown at a faster
rate during the first quarter than previously stated.
Additionally, prices fell further on news of accelerating
inflation and better-than-expected growth in the Euro-Zone.
During June, further gains were recorded from short positions in
short-term European fixed-income futures as prices moved lower
after the European Central Bank left its benchmark interest rate
unchanged at 4% and signaled it might raise borrowing costs in
July in order to combat accelerating inflation in the Euro-Zone.
Smaller gains were recorded during August from long positions in
U.S. fixed-income futures as prices increased on growing
<page> speculation that the U.S. Federal Reserve would not raise
interest rates at its August policy meeting. Lastly, gains were
recorded, during January, March, and August, from long positions
in Japanese fixed-income futures as prices increased amid
stronger demand and following a sharp decline in global equity
markets.  Smaller gains of approximately 0.2% were achieved
within the energy sector during May and June from long positions
in natural gas futures as prices increased amid declining
production in Western Canada, forecasts for an active hurricane
season in the Atlantic, and a drop in the value of the U.S.
dollar. Newly established short positions in natural gas futures
resulted in further gains during September as prices fell amid a
strengthening U.S. dollar.


For the Three and Nine Months Ended September 30, 2007
The Partnership recorded total trading results including interest
income totaling $(215,394) and expenses totaling $197,659
resulting in a net loss of $413,053 for the three months ended
September 30, 2007. The Partnership?s net asset value per Unit
decreased from $3,519.86 at June 30, 2007, to $3,345.91 at
September 30, 2007.

The most significant trading losses of approximately 8.2% were
recorded in the currency sector, primarily during July and
August, from both short and long positions in the South African
rand versus the U.S. dollar as the value of the rand moved
<page> without consistent direction amid uncertainty regarding
the future interest rate policy of the South African Reserve
Bank.  Further losses were incurred primarily during July from
short positions in the Japanese yen versus the U.S. dollar as the
value of the Japanese yen corrected higher against most of its
major rivals when traders reduced ?carry-trade? positions after
the sell-off in the global equity markets resulted in investors?
trimming ?riskier? assets funded by loans in Japan.  During
August, long positions in the Australian dollar and euro versus
the U.S. dollar experienced losses during the first half of the
month as the value of the U.S. dollar reversed higher against
these currencies as continued extreme volatility in the global
equity markets and widening credit losses tied to U.S. sub-prime
loans resulted in substantially stronger demand for U.S. dollar-
denominated government bonds.  A portion of the Partnership?s
losses during the quarter was offset by gains of approximately
1.2% recorded in the energy markets primarily during July and
September from long futures positions in crude oil and its
related products as prices moved higher amid worries that
supplies of European North Sea oil were dwindling and concerns
regarding U.S. refinery capacity, and after continuous hurricane
activity in the Gulf of Mexico threatened production facilities.
Within the global interest rate sector, short positions in U.S.
and German fixed-income futures resulted in further gains of
approximately 0.7% during July as prices declined due to investor
<page> sentiment that consistently strong economic data and
rising global inflation would result in higher interest rates in
the European Union and United States.  Additional gains were
experienced during August from newly established long positions
in U.S. and German fixed-income futures as prices moved sharply
higher in a worldwide ?flight-to-quality? after the significant
decline in the global equity markets, spurred by losses in the
U.S. sub-prime mortgage sector, caused investors to seek the
?safe haven? of government bonds.  Smaller gains of approximately
0.5% were recorded in the global stock index sector primarily
during September from long positions in U.S., Pacific Rim, and
German equity index futures as prices moved higher leading up to
and after the 50 basis point cut in interest rates by the U.S.
Federal Reserve, as well as on sentiment that the easing U.S.
Federal Reserve policy would continue.

The Partnership recorded total trading results including interest
income totaling $355,174 and expenses totaling $639,518, resulting
in a net loss of $284,344 for the nine months ended September 30,
2007. The Partnership?s net asset value per Unit decreased from
$3,453.29 at December 31, 2006, to $3,345.91 at September 30,
2007.

The most significant trading losses of approximately 11.6% were
incurred in the currency sector, primarily during January, March,
July, and August, from both short and long positions in the South
<page> African rand versus the U.S. dollar as the value of the
South African rand moved without consistent direction due to
conflicting economic data out of South Africa.  Further losses
were recorded from short positions in the Mexican peso versus the
U.S. dollar primarily during March and April as the value of the
Mexican peso moved higher amid speculation of an interest rate
hike by the Bank of Mexico.  Finally, losses were experienced
primarily during August from long positions in the British pound,
euro, Australian dollar, and New Zealand dollar versus the U.S.
dollar as the value of the U.S. dollar reversed higher against
these currencies as continued extreme volatility in the global
equity markets and widening credit losses tied to U.S. sub-prime
loans resulted in substantially stronger demand for U.S. dollar-
denominated government bonds.  A portion of the Partnership?s
losses in the first nine months of the year was offset by gains
of approximately 5.5% recorded in the global interest rate sector
primarily during January, May, and June from short positions in
European fixed-income futures as prices fell initially after
reports showed confidence in the Euro-Zone economy had stayed
close to a six-year high in December 2006.  Prices continued to
fall after strong economic data reported in the United Kingdom
and Germany increased inflation concerns.  Elsewhere, gains were
recorded during January, May, June, and July from short positions
in U.S. interest rate futures as prices fell amid strength in the
equity markets and consistently strong economic data out of the
United States and Euro-Zone.  Finally, newly established long
positions in U.S. and German fixed-income futures resulted in
<page> gains during August as prices moved sharply higher in a
worldwide "flight-to-quality" after the significant decline in
the global equity markets, spurred by losses in the U.S. sub-
prime mortgage sector, caused investors to seek the "safe haven"
of government bonds.  Additional gains of approximately 0.8% were
experienced in the global stock index sector, primarily during
April, May, June, and September, from long positions in German
equity index futures as prices moved higher on continued strong
corporate earnings and increased merger and acquisition activity.
 Furthermore, gains were recorded primarily during June and
September from long positions in Taiwanese equity index futures
as prices increased amid investor optimism regarding future
earnings in the technology sector.  Smaller gains of
approximately 0.5% were recorded during January from short
futures positions in crude oil and its related products as prices
declined on skepticism that OPEC would cut production as much as
originally pledged and after U.S. government data showed a
larger-than-expected increase in domestic inventories of gasoline
and heating oil.  Newly established long futures positions in
crude oil and its related products resulted in gains during
February, July, and September as prices moved higher amid
geopolitical uncertainty in Iraq and news that Iran would
continue with its nuclear program.  Furthermore, prices were
pressured higher amid worries that supplies of European North Sea
oil were dwindling, concerns regarding U.S. refinery capacity,
and after continuous hurricane activity in the Gulf of Mexico
threatened production facilities.
<page>
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options.  The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership?s assets are at risk of
trading loss.  Unlike an operating company, the risk of market-
sensitive instruments is inherent to the primary business activity
of the Partnership.

The futures, forwards, and options traded by the Partnership
involve varying degrees of related market risk.  Market risk is
often dependent upon changes in the level or volatility of
interest rates, exchange rates, and prices of financial
instruments and commodities, factors that result in frequent
changes in the fair value of the Partnership?s open positions,
and consequently in its earnings, whether realized or unrealized,
and cash flow.  Gains and losses on open positions of exchange-
traded futures, exchange-traded forward, and exchange-traded
futures-styled options contracts are settled daily through
variation margin.  Gains and losses on off-exchange-traded
forward currency contracts are settled upon termination of the
contract.  However, the Partnership is required to meet margin
requirements equal to the net unrealized loss on open forward
currency contracts in the Partnership accounts with the
<page> counterparty, which is accomplished by daily maintenance
of the cash balance in a custody account held at MS&Co.

The Partnership?s total market risk may increase or decrease as
it is influenced by a wide variety of factors, including, but not
limited to, the diversification among the Partnership?s open
positions, the volatility present within the markets, and the
liquidity of the markets.

The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements.  Margin requirements generally range between 2% and
15% of contract face value.  Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership typically to be many times the total
capitalization of the Partnership.

The Partnership?s past performance is no guarantee of its future
results.  Any attempt to numerically quantify the Partnership?s
market risk is limited by the uncertainty of its speculative
trading.  The Partnership?s speculative trading and use of
leverage may cause future losses and volatility (i.e., "risk of
ruin") that far exceed the Partnership?s experiences to date
under the "Partnership?s Value at Risk in Different Market
Sectors" section and significantly exceed the Value at Risk
("VaR") tables disclosed.
<page> Limited partners will not be liable for losses exceeding
the current net asset value of their investment.

Quantifying the Partnership?s Trading Value at Risk
The following quantitative disclosures regarding the Partnership?s
market risk exposures contain "forward-looking statements" within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act of
1995 (set forth in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934).  All
quantitative disclosures in this section are deemed to be forward-
looking statements for purposes of the safe harbor, except for
statements of historical fact.

The Partnership accounts for open positions on the basis of mark
to market accounting principles.  Any loss in the market value of
the Partnership?s open positions is directly reflected in the
Partnership?s earnings and cash flow.

The Partnership?s risk exposure in the market sectors traded by
the Trading Managers is estimated below in terms of VaR. The
Partnership estimates VaR using a model based upon historical
simulation (with a confidence level of 99%) which involves
constructing a distribution of hypothetical daily changes in the
value of a trading portfolio.  The VaR model takes into account
linear exposures to risk including equity and commodity prices,
interest rates, foreign exchange rates, and correlation among
<page> these variables. The hypothetical changes in portfolio
value are based on daily percentage changes observed in key market
indices or other market factors ("market risk factors") to which
the portfolio is sensitive.  The one-day 99% confidence level of
the Partnership?s VaR corresponds to the negative change in
portfolio value that, based on observed market risk factors, would
have been exceeded once in 100 trading days, or one day in 100.
VaR typically does not represent the worst case outcome.
Demeter uses approximately four years of daily market data (1,000
observations) and re-values its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period.  This generates a probability
distribution of daily "simulated profit and loss" outcomes.  The
VaR is the appropriate percentile of this distribution.  For
example, the 99% one-day VaR would represent the 10th worst
outcome from Demeter?s simulated profit and loss series.

The Partnership?s VaR computations are based on the risk
representation of the underlying benchmark for each instrument or
contract and do not distinguish between exchange and non-exchange
dealer-based instruments. They are also not based on exchange
and/or dealer-based maintenance margin requirements.

VaR models, including the Partnership?s, are continually evolving
as trading portfolios become more diverse and modeling techniques
and systems capabilities improve.  Please note that the VaR model
<page> is used to numerically quantify market risk for historic
reporting purposes only and is not utilized by either Demeter or
the Trading Managers in their daily risk management activities.
Please further note that VaR as described above may not be
comparable to similarly-titled measures used by other entities.

The Partnership?s Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership?s open positions as a percentage of total Net Assets
by primary market risk category at September 30, 2008 and 2007.
At September 30, 2008 and 2007, the Partnership?s total
capitalization was approximately $6 million and $7 million,
respectively.


Primary Market           September 30, 2008   September 30, 2007
Risk Category               Value at Risk        Value at Risk

Currency	      (0.96)%  	(1.73)%

Equity	        (0.24)	(0.36)

Interest Rate	(0.22)	     (0.32)

Commodity                    	(0.16)	(0.41)

Aggregate Value at Risk	      (1.23)%	(2.01)%


The VaR for a market category represents the one-day downside
risk for the aggregate exposures associated with this market
category.  The Aggregate Value at Risk listed above represents
the VaR of the Partnership?s open positions across all the market
categories, and is less than the sum of the VaRs for all such
<page> market categories due to the diversification benefit
across asset classes.

Because the business of the Partnership is the speculative
trading of futures, forwards, and options, the composition of its
trading portfolio can change significantly over any given time
period, or even within a single trading day.  Such changes could
positively or negatively materially impact market risk as
measured by VaR.

The table below supplements the quarter-end VaR set forth above
by presenting the Partnership?s high, low, and average VaR, as a
percentage of total Net Assets for the four quarter-end reporting
periods from October 1, 2007, through September 30, 2008.

Primary Market Risk Category	 High	    Low	      Average
Currency	(1.17)%	(0.60)%	(0.93)%

Equity	(0.72)	(0.11)	(0.43)

Interest Rate	(0.45)	(0.17)	(0.27)

Commodity	(0.40)	   -	(0.18)


Aggregate Value at Risk	(1.31)%	(0.82)%	(1.10)%


Limitations on Value at Risk as an Assessment of Market Risk
VaR models permit estimation of a portfolio?s aggregate market
risk exposure, incorporating a range of varied market risks,
reflect risk reduction due to portfolio diversification or hedging
activities, and can cover a wide range of portfolio assets.
<page> However, VaR risk measures should be viewed in light of the
methodology?s limitations, which include, but may not be limited
to the following:
*	past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
*	changes in portfolio value caused by market movements may
differ from those of the VaR model;
*	VaR results reflect past market fluctuations applied to
current trading positions while future risk depends on future
positions;
*	VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
*	the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

In addition, the VaR tables above, as well as the past performance
of the Partnership, give no indication of the Partnership?s
potential "risk of ruin".

The VaR tables provided present the results of the Partnership?s
VaR for each of the Partnership?s market risk exposures and on an
aggregate basis at September 30, 2008 and 2007, and for the four
quarter-end reporting periods from October 1, 2007, through
<page> September 30, 2008. VaR is not necessarily representative
of the Partnership?s historic risk, nor should it be used to
predict the Partnership?s future financial performance or its
ability to manage or monitor risk.  There can be no assurance that
the Partnership?s actual losses on a particular day will not
exceed the VaR amounts indicated above or that such losses will
not occur more than once in 100 trading days.

Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances.  These balances and any market risk they may represent
are immaterial.

The Partnership also maintains a substantial portion of its
available assets in cash at MS&Co.; as of September 30, 2008, such
amount was equal to approximately 105% of the Partnership?s net
asset value.  A decline in short-term interest rates would result
in a decline in the Partnership?s cash management income. This
cash flow risk is not considered to be material.

Materiality, as used throughout this section, is based on an
assessment of reasonably possible market movements and any
associated potential losses, taking into account the leverage,
optionality, and multiplier features of the Partnership?s market-
sensitive instruments, in relation to the Partnership?s Net
Assets.

<page>
Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership?s
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures - constitute
forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act.
The Partnership?s primary market risk exposures, as well as the
strategies used and to be used by Demeter and the Trading Managers
for managing such exposures, are subject to numerous
uncertainties, contingencies and risks, any one of which could
cause the actual results of the Partnership?s risk controls to
differ materially from the objectives of such strategies.
Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political
upheavals, changes in historical price relationships, an influx of
new market participants, increased regulation, and many other
factors could result in material losses, as well as in material
changes to the risk exposures and the risk management strategies
of the Partnership.  Investors must be prepared to lose all or
substantially all of their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at September 30, 2008, by market sector.  It may be
anticipated, however, that these market exposures will vary
materially over time.
<page>
Currency.  The largest market exposure of the Partnership at
September 30, 2008, was to the currency sector.  The Partnership?s
currency exposure is to exchange rate fluctuations, primarily
fluctuations which disrupt the historical pricing relationships
between different currencies and currency pairs.  Interest rate
changes as well as political and general economic conditions
influence these fluctuations. The Partnership?s primary exposure
at September 30, 2008, was to outright U.S. dollar positions.
Outright positions consist of the U.S. dollar vs. other
currencies.  These other currencies include major and minor
currencies.  Demeter does not anticipate that the risk associated
with the Partnership?s currency trades will change significantly
in the future.

Equity.  The second largest market exposure of the Partnership at
September 30, 2008, was to the global stock index sector,
primarily to equity price risk in the G-7 countries.  The G-7
countries consist of France, the U.S., the United Kingdom,
Germany, Japan, Italy, and Canada.  The stock index futures traded
by the Partnership are by law limited to futures on broadly-based
indices.  At September 30, 2008, the Partnership?s primary
exposures were to the NASDAQ 100 (U.S.), DAX (Germany), EURO STOX
50 (Europe), and TAIWAN (Taiwan) stock indices.  The Partnership
is primarily exposed to the risk of adverse price trends or static
markets in the U.S., European, and Asian stock indices.  Static
markets would not cause major market changes, but would make it
<page> difficult for the Partnership to avoid trendless price
movements, resulting in numerous small losses.

Interest Rate.  The third largest market exposure of the
Partnership at September 30, 2008, was to the global interest rate
sector.  This exposure was primarily spread across U.S., Japanese,
and European interest rate sectors. Interest rate movements
directly affect the price of the sovereign bond futures positions
held by the Partnership and indirectly affect the value of its
stock index and currency positions.  Interest rate movements in
one country, as well as relative interest rate movements between
countries, materially impact the Partnership?s profitability. The
Partnership?s primary interest rate exposure is generally to
interest rate fluctuations in the U.S. and the other G-7
countries? interest rates. Demeter anticipates that the G-7
countries? interest rates will remain the primary interest rate
exposures of the Partnership for the foreseeable future.  The
speculative futures positions held by the Partnership may range
from short to long-term instruments.  Consequently, changes in
short, medium, or long-term interest rates may have an effect on
the Partnership.

Commodity.
Energy.  At September 30, 2008, the Partnership had market
exposure to the energy sector.  The Partnership?s primary
energy exposure was to futures contracts in natural gas, as
well as crude oil.  Price movements in these markets result
<page> from geopolitical developments, particularly in the
Middle East, as well as weather patterns and other economic
fundamentals. Significant profits and losses, which have been
experienced in the past, are expected to continue to be
experienced in the future. Natural gas has exhibited
volatility in price resulting from weather patterns and
supply and demand factors and will likely continue in this
choppy pattern.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at September 30, 2008:

Foreign Currency Balances.  The Partnership?s primary foreign
currency balances at September 30, 2008, were in the euros,
Japanese yen, Hong Kong dollars, and British pounds. The
Partnership controls the non-trading risk of foreign currency
balances by regularly converting them back into U.S. dollars
upon liquidation of their respective positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Managers, separately, attempt to
manage the risk of the Partnership?s open positions in essentially
the same manner in all market categories traded. Demeter attempts
to manage market exposure by diversifying the Partnership?s assets
among different market sectors and trading approaches through the
selection of Commodity Trading Managers and by daily monitoring
<page> their performance. In addition, the Trading Managers
establish diversification guidelines, often set in terms of the
maximum margin to be committed to positions in any one market
sector or market-sensitive instrument.

Demeter monitors and controls the risk of the Partnership?s non-
trading instrument, cash.  Cash is the only Partnership investment
directed by Demeter, rather than the Trading Managers.

Item 4.	CONTROLS AND PROCEDURES
As of the end of the period covered by this quarterly report, the
President and Chief Financial Officer of Demeter, the general
partner of the Partnership, have evaluated the effectiveness of
the Partnership?s disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), and have
judged such controls and procedures to be effective.

Changes in International Control over Financial Reporting
There have been no material changes during the period covered by
this quarterly report in the Partnership?s internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
of the Exchange Act) or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.

Item 4T.	CONTROLS AND PROCEDURES
Not applicable.

<page> PART II.  OTHER INFORMATION

Item 1A. RISK FACTORS
Information regarding risk factors appears in Item 2.
?Management?s Discussion and Analysis of Financial Condition and
Results of Operations? and Item 3.  ?Quantitative and Qualitative
Disclosures about Market Risk? of this Form 10-Q.  There have been
no other material changes from the risk factors previously
referenced in the Partnership?s Report on Form 10-K for the fiscal
year ended December 31, 2007, and the Partnership?s Reports on
Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008.

Item 5.  OTHER INFORMATION
Limited Partners of the Partnership are advised that Demeter has
determined to withdraw from the Partnership effective November 30,
2008, and thereafter will commence dissolution of the Partnership
pursuant to the Partnership?s Limited Partnership Agreement.  In
connection with such withdrawal, Demeter terminated trading for
the Partnership effective October 31, 2008.  Following termination
of trading for the Partnership, all Partnership assets will be
paid interest at the rate equal to the average yield on 13-week
U.S. Treasury Bills, with your share of interest credited to your
Units.  The management and brokerage fees on any assets remaining
in the Partnership after October 31, 2008, will be waived, given
the absence of any further futures trading by the Partnership.

<page> Through November 30, 2008, qualified Limited Partners may,
under certain conditions, redeem some or all of their interest in
the Partnership and use the proceeds of such redemption to
purchase an interest in another Morgan Stanley managed futures
partnership for which Demeter is the general partner (an offering
in any such managed futures partnership is by prospectus or
offering memorandum only).  Otherwise, Limited Partners may simply
redeem their interest in the Partnership and receive the proceeds
of such redemption in cash.  Whether you exchange or redeem your
Partnership Units, there will be no minimum holding period
requirement or redemption charge.  Limited Partners who do not
redeem their interest in the Partnership prior to November 30,
2008, should be aware that final distribution of any remaining
Partnership assets is anticipated to be made on or about December
15, 2008.

Item 6.  EXHIBITS
31.01	Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02	Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

32.01	Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.





<page>
32.02	Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.






<page>




SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.




                        Morgan Stanley Cornerstone Fund II L.P.
                        (Registrant)

                        By: Demeter Management Corporation
                            (General Partner)

November 13, 2008       By: /s/Christian Angstadt
                               Christian Angstadt
                               Chief Financial Officer



The General Partner which signed the above is the only party
authorized to act for the Registrant.  The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.